Dow ends higher, but tech slump and rate worries add to S&P 500 and Nasdaq weekly loss

What drove markets

U.S. stocks are not off to a great start for the month after the Labor Day holiday.

“September is always a tough month for stocks. But the fear factor of perhaps the Fed not being finished with its hiking campaign, I think, is causing this indigestion,” said Peter Cardillo, chief market economist at Spartan Capital, in a phone call.

Stocks and the U.S. economy have remained fairly resilient this year as the Federal Reserve ratcheted up its policy interest rate to a 22-year high, but the resilience of markets is being tested this September with a deluge of fresh corporate borrowing, rising oil prices, and lingering concerns about the staying power of inflation.

While Treasury yields took a breather Thursday, with the 10-year Treasury rate near 4.26%, but still near its highs of the year on strong U.S. economic data, the dollar has continued to gain, with the ICE U.S. Dollar Index up 0.2%.

Rising yields hurt the relative attraction of stocks, while a strong dollar makes U.S. assets more expensive for foreign investors, reduces the value of overseas sales by U.S.-based companies, and can hurt foreign economies that rely on dollar-based goods.

Oil has rallied to 2023 highs to kick off September, though the U.S. benchmark CL00 on Thursday snapped a nine-day winning streak on Thursday.

Also lurking in the background is next week’s release of the August consumer-price index. Data released Thursday continued the good-news-is-bad-news dynamic, showing that first-time jobless benefit claims fell by 13,000 to 216,000 in the week ended Sept. 2. This is the lowest level since mid-February.

Economists polled by The Wall Street Journal had estimated new claims would rise 2,000 to 230,000. Last week claims fell a revised 3,000 to 229,000. That compared with the initial estimate of a decrease of 4,000 to 228,000.

“We’ve seen this movie before: Weekly jobless claims once again surprise to the downside, underscoring the labor market’s resilience,” Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, said in emailed comments.

While the economy has slowed and inflation cooled, employment remains “a thorn in the side of the Fed,” he said, adding that a strong labor market means Fed officials are nowhere near “backing away from a higher-for-longer stance.”

Companies in focus

• General Motors Co. GM shares slumped 0.8% Thursday for a third consecutive day of losses, after the UAW called a 10% wage increase counterproposal by the carmaker “insulting,” with negotiations to stave off a potential labor strike heading down to the wire.
• VinFast Auto Ltd. VFS shares skid more than 26% Thursday, as the electric-vehicle startup’s market capitalization’s fell more than $140 billion in less than two weeks. It went public in late August via a “blank check” SPAC offering.
• Apple Inc . AAPL shares fell 2.9% on renewed concerns about the company’s China business.
• Walt Disney Co. DIS shares fell 0.5%, posting their longest losing streak in nearly a year as its Charter Communications Inc. CHTR dispute persists.
• Nio Inc. NIO shares posted a third-straight loss Thursday, as part of a broad selloff in the U.S.-listed stocks of China-based companies. Shares of Alibaba Group BABA shed 4.7%.
• C3.ai Inc. AI shares tumbled 12.2% after the AI stalwart reported quarterly results that generally met analyst forecasts.
• Shares of GameStop Corp. GME fell 0.8% after the videogame retailer and original meme stock reported second-quarter results that beat expectations.
• Electric-vehicle maker Lucid Group Inc. LCID shares shed 2.3% a day after its chief executive told CNBC that it was exploring selling its cars in China.